09:13     CHINA STAR ENT<00326> - Announcement (3)                            

    (b)   completion of the Top-Up Placing; and                               
                                                                              
    (c)   if required, the Bermuda Monetary Authority granting                
    or agreeing to grant permission to allot, issue and                       
    subsequent transfer of the Subscription Shares.                           
                                                                              
    The Subscription Agreement does not provide either party                  
    the rights to waive the above conditions.                                 
                                                                              
    Application will be made to the Stock Exchange to grant                   
    the listing of, and permission to deal in, the Subscription               
    Shares.                                                                   
                                                                              
    Completion                                                                
    Although the Vendors are the connected persons (as defined                
    in the Listing Rules) of the Company and the arrangement                  
    of the Subscription has constituted connected transaction                 
    under the Listing Rules, such connected transaction is                    
    exempted from the reporting, announcement and independent                 
    shareholders' approval requirement under Rule 14A.31(3)(d)                
    of the Listing Rule. Under the Listing Rules, the                         
    Subscription must be completed within 14 days after the                   
    date of the Subscription Agreement, that is on or before                  
    10 March 2005.                                                            
                                                                              
    In the event that the conditions to the Subscription                      
    Agreement are not fulfilled by 10 March 2005, the Company                 
    and the Vendors may elect, subject to compliance with all                 
    requirements in relation to connected transactions under                  
    the Listing Rules, to postpone completion of the                          
    Subscription to a later date to be agreed between the                     
    Company and the Vendors.                                                  
                                                                              
    GENERAL MANDATE                                                           
    The Subscription Shares will be issued under the general                  
    mandate ("General Mandate") to allot, issue and deal with                 
    Shares granted to the Directors by a resolution of the                    
    Shareholders passed at the special general meeting of the                 
    Company (the "SGM") held on 21 January 2005 subject to the                
    limit up to 20% of the issued share capital of the Company                
    as at the date of passing the resolution at the SGM (i.e.                 
    76,635,321 Shares). As at the date of this announcement,                  
    none of the new Shares has been issued under the General                  
    Mandate.                                                                  
                                                                              
    EFFECTS ON SHAREHOLDING STRUCTURE                                         
    The existing shareholding structure of the Company and the                
    shareholding structure of the Company upon completion of                  
    the Top-Up Placing and Subscription are set out as below                  
    (assuming no further share capital would be issued until                  
    the completion of the Top-Up Placing and Subscription):                   
                                                                              
    Existing                                                                  
                                                                              
    Immediately after completion of the Top-Up Placing                        
                                                                              
    Immediately after completion of Top-Up Placing and                        
    Subscription                                                              
                                                                              
       Shares   %   Shares   %   Shares   %                                   
                                                                              
    Porterstone (note 1)   61,905,000   13.95   1,905,000                     
    0.43   61,905,000   11.89                                                 
    Dorest (note 2)   18,510,000   4.17   18,510,000   4.17                   
    18,510,000   3.56                                                         
    Mr. Heung   18,395,000   4.14   1,795,000   0.41                          
    18,395,000   3.53                                                         
    Ms. Chen   9,429,410   2.12   9,429,410   2.12                            
    9,429,410   1.81                                                          
    Ms. Li Yuk Sheung, being a Director   16   0.00   16   0.00               
    16   0.00                                                                 
                                                                              
    Subtotal   108,239,426   24.38   31,639,426   7.13                        
    108,239,426   20.79                                                       
                                                                              
    Public                                                                    
                                                                              
    Placees for the Top-Up Placing   0   0.00   76,600,000                    
    17.25   76,600,000   14.72                                                
    Other public Shareholders   335,702,182   75.62                           
    335,702,182   75.62   335,702,182   64.49                                 
                                                                              
    Total   443,941,608   100.00   443,941,608   100.00                       
    520,541,608   100.00